CONTRACT AND CONTRACTUAL TYPES
AN APPARENT PARADOX: GENERAL PRINCIPLES IN THE LACK OF A GENERAL THEORY
In line with an empirical approach focused on the divine creation in the reality, Islamic classical jurists have never formulated any definition or general theory of the contract: the ‘aqd appears to be, from their perspective, a relationship whose fundamental purpose is to maintain the equilibrium of the titles involved in the transaction (ḥuquq al-‘aqd), as linked to some existing / real properties.
More precisely, this relationship embraces the reality of the ḥaqq in the empirical manifestation of the case which is subject to the application of fiqh (furu‘ al-fiqh). Accordingly, Islamic law doesn’t elaborate any abstraction of the ‘contract’ as an ideal entity, but focuses on the concrete and equal distribution of the subject matter.
FREEDOM OF CONTRACT IN ISLAMIC FIQH? THE DIVERGENCES OF THE MADHAHIB
A. PRELIMINARY REMARKS ON THE ROLE OF THE NIYYA
As Schacht remarks, it cannot be denied that the niyya (intent) represents a fundamental concept in the Islamic theory of contracts. But the legal necessity of a valid niyya to perform the act is required by all the scholars only when the contract is intended as an act of worship towards God (‘ibadat) and not in the field of human interactions / worldly transactions (mu‘amalat).
Dealing with human interactions stricto sensu (that is to say, as human actions not directly aimed at a reward in the hereafter), the relevance given to the niyya by the Schools varies enormously: from the severe objectivism of Shafi‘is and Ḥanafis (with the prevalence of the declaration on the – real – inner intention, without any investigation on the niyya), the attitude shifts towards subjectivism in the Maliki and Ḥanbali Schools, where the niyya is always taken into consideration.
B. FREEDOM OF CONTRACT, NOMINATE CONTRACTS AND DIFFERENCES OF THE SCHOOLS
The relevance given to the niyya in the formation of the contract in the Ḥanbalī School matches with the freedom of contract which characterizes this madhhab: following the teachings by Ibn Taymiyya (d. 728/1328) the Ḥanbalīs interpret the sanctity of contract in Islam as a presumption of legality of any stipulation not expressly forbidden (doctrine of ibaha).
This interpretation, anyway, is strongly opposed by the other Sunni Schools (Ḥanafi, Maliki, Shafi‘i). Against the doctrine of ibaha, they argue that the only valid transactions are those recognized by their traditions, in a list of nominate contracts.
This resistance reflects a policy of preservation of the divine authority. If the only substantial source of rule is the divine will, any valid transaction has to be singled out from the revealed texts and the Sunna: established any valid setting of entitlements (ḥuquq) in the Shari’ah, there is limited space for the freedom of contract. However, the apparent denial of the contractual freedom is often balanced by the acceptance of legal stratagems (ḥiyal, sing. ḥila). On the contrary, the Ḥanbalis, thanks to their theoretical recognition of the contractual freedom, have no need to appeal to legal stratagems.
C. ḤIYAL AND CONCEPTIONS OF LAW
This shift from objectivism to subjectivism, the different level of freedom of contract and the opposite approach on the ḥiyal among the madhahib may find explanation in the different perspective of the Schools in conceiving ‘law’ as something aimed at the ‘benefit’ or ‘utility’ of the contracting parties in a human relationship, or aimed at fostering ‘benefits’ in front of God, according to a moral stance.
In particular, the Ḥanafis developed their ḥiyal into a special branch of law, that of makharij, i.e ‘exits’: the ḥiyal were intended as legal ‘remedies’, techniques to seek an ‘utility’ for the practitioners belonging to the madhhab. The Shari‘ah was interpreted as a body of ‘exits’ to ‘escape the unlawful in search of the lawful’ (Q. LXV:2: “If anyone shows piety towards Allah, He will appoint for him a way out (makhraj)”). In other words, the ḥiyal were not intended to ‘escape’ the Law, but, on the contrary, to ‘escape the unlawful in search of the utility of the Law’.
On the contrary, the Malikis, in accordance with their subjective perspective, rejected the position that ‘utility’ is the ‘essence of Law’, and tended to evaluate legal devices through the principle of sadd al-dhara’i‘, i.e. “to block ways” (ways that are likely to result in an evil end). In this way, their position resembled that of the Ḥanbalis, who categorically rejected ḥiyal as formalistic stratagems to circumvent legal provisions and focused on the moral background of the action.
These divergences among the madhahib legitimize the thesis of the existence, within the same theory of justice, of two distinct Islamic legal systems, one mainly utilitarian, in the case of Ḥanafis and Shafi‘is, and the other moralistic, for Malikis and Ḥanbalis. A divergence that confirms the normative pluralism which belongs to the probabilistic conception of the ‘understanding’ (fiqh).
CRITERIA OF CLASSIFICATION OF CONTRACTS
As a direct consequence of its empirical approach (see above), Islamic scholarship classifies bilateral transactions as different forms of ‘exchange of properties’, maintaining the contract of sale (bay’), the exchange of property for money, as fundamental archetype.
In particular, Muslim fuqaha’ apply different criteria of classification:
- contracts may be classified according to their subject matter, which can be ‘ayn / dayn. Both ‘ayn and dayn may be interpreted as owned (milk) property (mal), as assets of the patrimonium of a person: this estate, in fact, may comprise ‘ayn (specific visible thing) or dayn (literally ‘debt’, subsisting ‘in the dhimma of the counterpart’);
- the exchange of the ‘substance’ (raqaba) or the ‘benefits, proceeds’ (manfa‘a) of the property (mal);
- in relation to the enforceability of the contract, ‘uqud may be binding by ‘word’ (qawl) or by ‘fact’ (fi‘l): the former ones are obliging by the simple expression of the consensus (sale, lease and other synallagmatic contracts); for the latter ones the beginning of the execution is required in order for them to have binding effects (e.g. deposit, partnership - qiraḍ -, forward purchase - salam);
- the exchange may be synallagmatic/bilateral (mu‘awaḍat) or unilateral (tabarru‘at), according to the onerous or liberal character of the transaction.
Bearing in mind the specifications given above on the divergences of the madhahib on the recognition of the freedom of contract and the classifications based on raqaba / manfa‘a and mu‘awaḍat / tabarru‘at, Islamic scholars refer to a list of contractual types, considering whether, in any given contract, right passes on the ‘substance’ or the ‘proceeds’, in a bilateral or unilateral way. Thus, the basic contracts are four:
i. Bay‘ (sale): where raqaba passes for price (tamlik al-‘ayn bi-‘iwad);
ii. Hiba (gift): where raqaba passes for no price (tamlik al-‘ayn bila ‘iwad);
iii. Ijara (hire): where manfa‘a passes for price;
iv. ‘Ariya (loan of ‘ayn) or qarḍ (loan of dayn): where manfa‘a passes for no price.
Other nominate contracts include those of
- salam (forward sale), murabaḥa (mark-up sale),
- muḍaraba or qiraḍ ([sleeping] partnership), sharika, shirka or musharaka (partnership),
- istiṣna‘ (contract of manufacture),
- mortgage (rahn),
- wadī‘a (deposit),
- wakalah (mandate),
- kafala (suretyship).